Logistics has gained importance for several reasons, including rising transportation costs, production efficiency reaching peaks, inventory philosophy changes, and globalization. Marketing logistics interfaces involve activities like forecasting, transportation, storage, and order fulfillment that influence factors such as price, product design, promotion strategies, and customer service levels. Increasing production efficiency can be achieved through improving workflows, training employees, preventative maintenance, and organization.

19. Logistic Model

20. Supply chain Overview
Vendors/ plant/ ports Transportation
customer
Warehousing
Transportation
Transportation Warehousing

21. Logistics has gained importance due to the following trends
Raise in transportation cost.
Production efficiency is reaching a peak
Fundamental change in inventory philosophy
Product line proliferated
Computer technology
Increased use or computers
Reduction in economic regulation
Growing power of retailers
Globalization

22. Further more Logistics has gained importance in the international marketing with
the following reasons:
1. Technological advancement in the fields of information processing and
communication.
2. Technological development in transportation and material handling.
3. Companies are centralizing production to gain economies of scale.
4. Most of the MNC organizations are restructuring their production facilities on a
global basis.
5. In many industries, the value added by manufacturing is declining as the cost of
materials and distribution climbs.
6. High volume data processing and transmission is revolutionizing logistics
control systems.

23. 8. With the advancement of new technologies, managers can now update sales and
inventory planning faster and more frequently, and factories can respond with more
flexibility to volatile market conditions.
9. Product life cycles are contracting. Companies that have gone all out to slash
costs by turning to large scale batch production regularly find themselves saddled
with obsolete stocks and are unable to keep pace with competitors‟ new-product
introductions.
10. Product lines are proliferating. More and more product line variety is needed to
satisfy the growing range of customer tastes and requirements, and stock levels in
both field and factory inevitably rise.
11. The balance of power in distribution chain is shifting from the manufacturers to
the trader.

24. OBJECTIVES OF MARKETTING LOGISTICS
The General objectives of the logistics can be summarized as:
1. Cost reduction
2. Capital reduction
3. Service improvement

25. MARKETING AND LOGISTICS INTERFACE
Marketing activities Logistics activities Marketing logistics interface
Forecasting
Transportation
Storage
Packing
Order fulfilment
Marketing research
Product mix
pricing
promotion
sales force management
Customer service
Transport
Inventory processing
Material handling
Information

26. Marketing and Logistic
Interface

27. Price
Product
Promotion
Place - Customer
service levels
Transport cost
Inventory
carrying cost
Warehousing
cost
Order processing and
information cost
Lot quantity cost
Marketing
Logistics Relationship of logistics to marketing

28. Logistics in the firm: the Micro Dimension:
Logistics Interfaces with Marketing:
Marketing mix: 4p’s
1.Price
2.Product
3.Promotion
4.Place

29. Price:
1. Carrier Pricing:
Generally since the larger the shipment, the cheaper the transportation
the rate. Shipment size should be tailored to the carriers vehicle capacity
where possible.
2. Matching schedules:
Quantity discounts should be tied to carrier quantity discounts.
3. Volume relationships:
Volume sold will affect inventory requirements.

30. Product:
1. The physical attributes of a product is a decision made by marketing
department. A lot of different product into the market each here. The physical
dimensions of a product affect the availability of the logistic system to move and
store the product.
2. For this reason it is important to logistic managers to offer impute to the
marketing department to decide the physical dimensions of a new products.
The physical dimensions of a product affect the storage, movement system, and
moves of transportations of the company can use.

31. Promotion :
1. Push v/s Pull:
The most important factor is that the Logistics division is aware of any changes in
demand patterns so that it can plan for any consequences.
Pull strategies tend to be more erratic.
Push strategies tend to more predictable.
2. Channel competition:
The more popular a product, the easier it is to persuade channel members to
promote your product.

32. Place:
1.wholesalers:
Generally, since wholesalers are combining purchases for multiple retailers,
the shipment size tend to be larger and the no. of transactions that have to
be processed are fewer, with the result that logistics costs are smaller.
2. retailers:
With the exception of very large retailers who act more like wholesalers,
smaller sales are the norm. these generally cost more for transportation and
order processing.

33. Logistics Activities
1. Customers service
2. Demand forecasting
3. Distribution communication
4. Inventory control
5. Material handling
6. Order processing
7. Part and service support
8. Plant and warehouse site selection
9. Procurement
10. Packaging
11. Return goods handling
12. Salvage and scrap disposal
13. Traffic and transportation
14. Warehousing and storage

34. Value Chain

35. A value chain is a business model that describes the full
range of activities needed to create a product or service.
For companies that produce goods, a value chain
comprises the steps that involve bringing a product from
conception to distribution, and everything in between—
such as procuring raw materials, manufacturing functions,
and marketing activities.
A company conducts a value-chain analysis by evaluating
the detailed procedures involved in each step of its
business. The purpose of a value-chain analysis is to

36. String of collaborating players, who work together to satisfy
market demand for specific product or services, is called
“Value Chain”.
The intent of a value chain is to increase the value of a
product or services.

37. Key points:
•A value chain is a step-by-step business model for
transforming a product or service from idea to reality.
•Value chains help increase a business's efficiency so the
business can deliver the most value for the least possible
cost.
•The end goal of a value chain is to create a competitive
advantage for a company by increasing productivity while
keeping costs reasonable.
•The value-chain theory analyses a firm's five primary
activities and four support activities.

38. Understanding Value Chains
Because of ever-increasing competition for unbeatable
prices, exceptional products, and customer loyalty,
companies must continually examine the value they create
in order to retain their competitive advantage. A value chain
can help a company to discern areas of its business that
are inefficient, then implement strategies that will optimize
its procedures for maximum efficiency and profitability. In
addition to ensuring that production mechanics are
seamless and efficient, it's critical that businesses keep
customers feeling confident and secure enough to remain
loyal. Value-chain analyses can help with this, too.

39. Background
Michael E. Porter, of Harvard Business School, introduced
the concept of a value chain in his book, Competitive
Advantage: Creating and Sustaining Superior
Performance. He wrote: "Competitive advantage cannot
be understood by looking at a firm as a whole. It stems
from the many discrete activities a firm performs in
designing, producing, marketing, delivering, and supporting
its product."1

In other words, it's important to maximize value at each

40. Components of a Value
Chain

41. Porter’s value chain model

42. Primary Activities
Primary activities consist of five components, and all are essential
for adding value and creating competitive advantage:
1.Inbound logistics include functions like receiving, warehousing,
and managing inventory.
2.Operations include procedures for converting raw materials into
a finished product.
3.Outbound logistics include activities to distribute a final product
to a consumer.
4.Marketing and sales include strategies to enhance visibility and
target appropriate customers—such as advertising, promotion, and
pricing.
5.Service includes programs to maintain products and enhance

43. Support Activities
The role of support activities is to help make the primary activities more
efficient. When you increase the efficiency of any of the four support
activities, it benefits at least one of the five primary activities. These support
activities are generally denoted as overhead costs on a company's income
statement:
1.Procurement concerns how a company obtains raw materials.
2.Technological development is used at a firm's research and
development (R&D) stage—like designing and developing manufacturing
techniques and automating processes.
3.Human resources (HR) management involves hiring and retaining
employees who will fulfil the firm's business strategy and help design,
market, and sell the product.
4.Infrastructure includes company systems and the composition of its
management team—such as planning, accounting, finance, and quality

44. Production Efficiency

45. Production efficiency, also known as productive efficiency,
identifies the conditions in which goods can be produced at
the lowest possible unit cost. In order to achieve production
efficiency, one should utilize resources and minimize
waste, which in turn, translates to higher revenues.
Basically, production efficiency looks at the maximum
output you can achieve using the same assets that you
already have.

46. Looking at production efficiency usually happens when a
system can no longer produce more goods without
sacrificing the production of another related product.
Instead of just measuring productivity levels, production
efficiency also considers the amount of resources required
for production. This allows companies to achieve a good
balance between minimization of costs and maximization
of resources, while maintaining a good quality of products.

47. Manufacturing facilities recognize the importance of being
cost-effective. However, this can become problematic
when the priority of the facility becomes too focused on
purely reducing costs. Production efficiency, in most
cases, is a more useful guideline for facility managers to
ensure that costs are optimized, without sacrificing the
quality of products.

48. How to Increase Production Efficiency
To ensure efficient production, a facility must first have a
reliable baseline data set. A facility can more easily identify
opportunities to improve if facility managers know the
current efficiency levels. After completing the first step,
companies are more effective at quantifying the effects of
process improvements. Some key ways to increase
production efficiency include:

49. Improve Workflows
Workflows are procedural steps that tend to be taken as an
established standard. While this could be true for some
cases, note that developments in the team’s skill sets and
technological capabilities may provide opportunities to
update the existing workflow. Examine your current
workflow and look for potential steps that can be simplified.

50. Train Employees
An employee’s learning and development is a
continuous process. As technological advancements
become more readily available, companies should
find value in training employees. Knowledge and
wisdom are valuable tools for getting rid of
inefficiencies.

51. Incorporate Preventive Maintenance
Processes
Unwanted surprises can set the team back in terms of
productivity and efficiency. By employing preventive
maintenance procedures, the team is more effective at
planning out resources ahead of time.
Be Organized
Being organized significantly cuts unnecessary
movements. This allows for a more efficient allocation of
time to activities that actually matter.

52. What is Outsourcing?

53. Outsourcing is using an external supplier for services to a
company that cannot provide them for itself, or cannot provide
them in an efficient way.
If you look at the situation a few decades ago, there were
many companies that manufactured products, stored the
products in their own warehouses, ran their own transport fleet
and sought to distribute those products, all under their own
“umbrella” and their own management.
These can include a mix of shipping, storing, packing and/or
delivering a company’s physical goods, from raw materials all the
way to the finished product

54. The terms “outsourced logistics” and “third-party logistics”
are roughly interchangeable — they refer to the same
thing.
In the 1970s, 80s and 90s, it became increasingly
expensive and complex for these companies to handle the
warehousing and the transport themselves. The
outsourcing industry grew up in parallel with this and the
decision of many companies to be supplied externally for
such “non-core” or non-strategic activities.

55. Key Reasons for Logistics Outsourcing
Are there other motivations, besides cost, for companies to outsource “non-
core” activities?
cost savings should not necessarily be the primary factor in a logistics
outsourcing decision. In fact, it’s relatively rare for a company to enjoy lower
supply chain costs for some time after partnering with a 3PL.
However, there are a number of other very compelling reasons to outsource a
logistics operation.
Take the example of running a warehouse efficiently. This takes
considerable time and resources, not to mention special technologies and
investments in mobile equipment, racking systems and so on.
This kind of complexity can be difficult for companies to manage in addition to
their truly strategic activities—the ones that they really want to compete in.
A company specialising in sales or in manufacturing, for example,
doesn’t necessarily want the bother of managing warehousing and transport.

56. Other reasons to outsource include:
•To achieve customer service improvements
•To gain access to global capability
•To increase flexibility
•To benefit from economies of scale…
And perhaps the most common reason of all today
medium-sized enterprises) is to tap into advanced
many 3PLs now offer to improve visibility, aid process-
customer demands for real-time information.

57. The Pros & Cons of Outsourcing Your Logistics
Key advantages to outsourcing logistics:
•The ability to focus on core business competencies rather
than supply chain operations
•Potential to lower overall transport and logistics costs
•Increased flexibility and efficiency (due to more
streamlined operations)
•Improved service levels (leading to increased customer
satisfaction)
•Less risk, due to reduced asset ownership and
administrative responsibility

58. Potential disadvantages to outsourcing
logistics:
•Loss of control if not managed properly
•Lack of communication/openness by one or both
parties can lead to suboptimal operations
•Poor 3PL selection can result in supply chain
disruptions, high costs, and lowered service levels